ITO Vs Mangalam Drugs & Organics Ltd (ITAT Mumbai)
ITAT Mumbai Upholds CIT(A)’s Deletion of ₹37.84 Cr Bogus Purchase Addition Against Mangalam Drugs, Citing Sufficient Evidence and Procedural Fairness
Facts: Mangalam Drugs & Organics Ltd., engaged in manufacturing bulk drugs and trading, filed its income tax return for AY 2011–12 declaring an income of ₹56.14 lakh. The case was selected for scrutiny, during which the Assessing Officer (AO) added ₹37.84 crore for alleged bogus purchases, ₹51.80 lakh for excess depreciation, and ₹0.99 lakh under Section 14A. The AO issued notices under Section 133(6) to 23 suppliers; 7 did not respond, and discrepancies were found in replies from 3 others. Based on this, purchases from 10 parties were treated as bogus. The assessee appealed to the CIT(A), who deleted the bogus purchase addition but upheld the others. The Revenue challenged this relief before the ITAT.
Legal Issues:
1.Whether the addition of ₹37.84 crore on account of alleged bogus purchases was justified solely on the basis of non-response or discrepancies in replies to notices under Section 133(6)?
2. Whether the CIT(A) was right in deleting the bogus purchase addition after accepting additional documentary evidence furnished by the assessee and without rejection of books of accounts by the AO.
